Inflation escalates to 3-year high. And it might get worse before it gets better.

The Fed's preferred inflation gauge rose to a three-year high in April, with further increases possible. That implies a tougher backdrop for households, businesses, and the broader U.S. economy, and may keep the Federal Reserve cautious on easing. The development is market-relevant because it reinforces higher-for-longer inflation and policy risks.

Analysis

The Fed's preferred inflation gauge rose to a three-year high in April, with further increases possible. That implies a tougher backdrop for households, businesses, and the broader U.S. economy, and may keep the Federal Reserve cautious on easing. The development is market-relevant because it reinforces higher-for-longer inflation and policy risks.